Archive for category: Uncategorized

Due to the introduction of the new ‘transfer balance cap’ from 1st July, 2017, super fund members with pension balances (in ‘retirement phase’) exceeding $1.6 million will need to partially commute one or more of their pensions to avoid the imposition of excess transfer balance tax.

In addition, members in receipt of a transition to retirement income stream (‘TRIS’) will lose the pension exemption from 1st July, 2017.

This means that the future disposal of any assets currently supporting such pensions will potentially generate a higher taxable capital gain (eve though the disposal of the asset prior to 1st July, 2017 could be fully or partially tax-free, depending on whether the asset is a segregated or unsegregated asset).

Fortunately, to avoid funds selling off assets before 1st July, transitional provisions have been introduced to allow super funds to apply CGT relief in certain situations.

Although the choice to apply the CGT relief can be made up until the day the super fund is required to lodge its 2017 tax return, in many cases, action must be taken on or before 30th June, 2017 for the fund to even be eligible to make that choice. In particular, funds calculating exempt pension income using the segregated assets method will generally need at least a partial commutation of the pension.

Please contact our office if you need any information regarding the super reforms, including what needs to be done to obtain CGT relief (if necessary), whether a TRIS should be commuted to accumulation phase or continued into the 2018 year, and how the new contribution rules will affect contributions in both the current and future years.

The ATO is visiting more than 400 businesses across Perth and Canberra this month as part of a campaign to “help small businesses stay on top of their tax affairs”.

Assistant Commissioner Tom Wheeler said: “Our officers will be visiting restaurants and cafes, hair and beauty and other small businesses in Perth and Canberra to make sure their registration details are up to date. These industries are on our radar because they have ready access to cash, and this is a major risk indicator.”

“We then work to protect honest businesses from unfair competition by taking action against those who do the wrong thing”.

The industries they are visiting have some of the highest rates of concerns reported to the ATO from across the country.

With the prevalent focus on increasing audit activity, it is more likely than ever that you could be audited. Audit Shield service provides for the payment of professional fees incurred in the event that you are selected for an audit, enquiry, investigation or review by the Australian Taxation Office (ATO) or other government body, in relation to lodged returns. The cost of being properly represented in these matters can be quite considerable depending on the length of time involved in the investigation. Even the simplest enquiry can require hours of work.

All professional fees up to a prescribed limit (with no excess) are covered when you engage Audit Shield service in audit activity matters. Fees, legal fees, bookkeeping fees and other specialist professional advisor fees are covered. Audit Shield also provides retrospective cover so that all previously lodged returns are included in the coverage.

The list is extensive as to what is covered under Audit Shield. Income Tax, GST and BAS, Superannuation Guarantee, PAYG Withholding, Fringe Benefits Tax, Payroll Tax, Land Tax, Stamp Duty, WorkCover and Self Managed Superannuation Funds (SMSFs) are just a few that are included.

Is Audit Shield service right for you?
All of our clients can take advantage of the Audit Shield service. Different levels of cover are available for salary earners, businesses and SMSFs.

Anyone can be targeted, even if their lodgements are accurate, and this is no reflection on the quality of work from your accountant. With all of this in mind, we offer you the opportunity to protect yourself with our Audit Shield service.

If you would like peace of mind and coverage in the event of audit activity, please ask your accountant or one of our friendly team members about our Audit Shield service.

Case Studies of Audit Activity:

Australian taxpayers, in the form of businesses, individuals and Self Managed Superannuation Funds, are constantly finding themselves at the mercy of the Australian Taxation Office (ATO) or
other government agencies for the purpose of audits, enquiries, investigations or reviews.

Below are a few examples of Audit Shield clients who had lodgements which were thorough and honest, however were still sought after by the ATO. Luckily they all had Audit Shield in place to avoid the costly ramifications!

Type: Payroll Tax Investigation
End Result: Fees of $8,801 were fully covered by Audit Shield.

A Queensland based entity was selected in respect of whether or not the right amount of payroll tax was paid and whether grouping was relevant. All enquiries with regard to grouping were satisfactorily responded to but the client was still found to have slightly understated one contractor payment and some minor superannuation which resulted in the authority issuing an assessment for $1,553.

Type: Stamp Duty Enquiry
End Result: Fees of $1,210 were fully covered by Audit Shield.

The matter was in respect of a Deed of Settlement which the OSR were arguing should have been subject to Stamp Duty for this Western Australia based Audit Shield user. It was deemed that Stamp Duty should have been paid on the transaction and an assessment was issued for $13,490. Penalties were successfully argued down to nil.

Type: Income Tax (CGT) Review
End Result: Fees of $9,625, including $1,671 of legal fees, were fully covered by Audit Shield.

A review of the use of CGT Small Business Concessions on a gain of around $5 million reduced down to around $450,000 was conducted on a Tasmanian based client.

After providing all the responses and obtaining some legal advice to further validate the client’s position, the outcome was that the ATO accepted the returns as lodged.

Type: Land Tax Audit
End Result: Fees of $2,708 were fully covered by Audit Shield.

A New South Wales based client completed a questionnaire in regards to his land holdings to be used to determine whether he is liable for Land Tax.

The outcome was that property was found not to be primary production land and the client was assessed for $,300 worth of Land Tax.

Type: Employer Obligations Audit
End Result: Fees of $7,374 were fully covered by Audit Shield.

A Victorian based client was picked due to a data-matching flag where the ATO believed the employees had claimed more PAYG withholding than the employer had reported.

Although the issue of the mismatch of PAYG withholding was cleared, the client was found to not have paid the correct amount of superannuation and was assessed for $4,083 in Superannuation Guarantee Charge.

An employee construction project manager/supervisor was denied deductions for overtime meal expenses, as he was not paid an overtime meal allowance under an industrial agreement (award).

The taxpayer often worked at nights and on weekends during the relevant income years, and so additional amounts were negotiated and ‘rolled into’ his salary to cover the fact that he was expected to work additional hours, and also to cover any out-of-pocket expenses associated with such overtime.

However, the taxpayer’s salary was not paid under an award, which was simply used as a starting point in annual remuneration negotiations (and he was paid the same amount each week, regardless of the hours worked or expenses incurred).

Therefore, the AAT agreed with the ATO, finding that the taxpayer had received no overtime meal allowance under the relevant industrial award.

As no deduction is claimable under the income tax law for overtime meal expenses unless an appropriate award overtime meal allowance is paid, the Tribunal swiftly dismissed the taxpayer’s appeal, and also affirmed the 25% administrative penalty.